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The startup that created AI
OpenAI has become one of the world's most valuable startups
Find and Scale
October 31, 2024
The origin story of ChatGPT
Founded in 2015, OpenAI is now valued at $157 billion, with its ChatGPT platform serving over 200 million weekly users across 152 countries. Having raised a total of $17.9 billion in funding over several rounds, partnering with Microsoft, and getting rid of its non-profit status, OpenAI is among the world's most valuable startups.
Startup Story of OpenAI
The Non-Profit Vision
The origin of OpenAI began as a nonprofit created by 12 innovators, including Elon Musk and Sam Altman, focused on advancing AI in a way that aligned with human values and transparency. Though at the time it offered only modest salaries, OpenAI attracted top researchers, inspired by the vision and potential the startup presented with combining AI development with societal benefits.
“The best thing I could imagine doing was moving humanity closer to building real AI in a safe way.”
As OpenAI matured, the team recognized that nonprofit funding alone wouldn’t be enough to drive their ambitious plans. When Altman became CEO in 2019, he introduced a “capped funding” model to attract substantial project financing. What followed was the launch of GPT-2 in 2019, GPT-3 in 2020 and DALL-E in 2021, pushing AI’s creative potential in language and visual generation.
“Generative AI is not a replacement for human creativity, but rather a tool that can augment and enhance it.”
Sam Altman, CEO of OpenAI
The For-Profit Pivot
In 2022, the launch of ChatGPT marked a turning point for OpenAI. Designed to communicate with users in a conversational tone and ‘chit-chat’ manner, ChatGPT redefined the standards of artificial intelligence, proving that machines can ‘learn’ the nuances and complexities of human language and interaction. The AI chatbot’s launch sparked global interest and gained over a million sign-ups within a week.
Following this success, Microsoft deepened its long-term partnership with OpenAI and announced a $10 billion investment - a partnership which secured Microsoft a 49% stake in OpenAI and promised to expand ChatGPT’s global reach.
The Most Controversial Startup
Operating under a capped funding model has raised concern for its potential to conflict with its public benefit mission. Microsoft's entitlement to a slice of the AI-pie has opened criticism that the transition to a profit-driven model could lead to a focus on shareholder interests over its original commitment to open research and transparency.
This restructuring would fundamentally change the governance structure meaning those previously tasked with ensuring the startup’s operations align with their founding principles, would no longer have control over the organization. Such a transition fuels questions about the delicate balance between AI innovation, profit motives and ethical responsibility.
“We remain focused on building AI that benefits everyone. The nonprofit is core to our mission and will continue to exist.”
OpenAI has also endured internal conflicts. Musk’s departure from OpenAI due to potential conflicts of interest with Tesla was followed by a series of unfortunate events. In 2023, Altman was temporarily asked to step down as CEO, only to return days later after concerns about his handling of AI safety.
More recently, Musk filed a lawsuit against OpenAI, and senior advisor Miles Brundage stepped down due to fears about the fast pace of AGI developments.
“We need regulatory oversight, so we don’t do something very foolish. I mean with artificial intelligence we might be summoning the demon.”
Still only the beginning
Despite this OpenAI continues to push forward. In 2023, the startup expanded ChatGPT’s reach with mobile apps for both iOS and Android. September 2024 saw the release of OpenAI’s “o1-preview” model, an advanced platform designed to tackle complex problem-solving with greater strategic depth.
Responding to public concern, OpenAI has pledged to balance its advancements with transparency and social responsibility, committing to public engagement and AI that benefits humanity.
“Generative AI is in its early stages, and we have only scratched the surface of what it can do.”
Written by Olivia Bucherer-Ezer
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Odin & Hari